What do economists mean by "consumer equilibrium?"
In order to reach consumer equilibrium, consumers must allocate their income in such a way that the marginal utility per dollar for each good is the same for every good. In essence, the value-per-dollar expended is equal for all goods at consumer equilibrium. If this was not so, consumers could make themselves better off by reallocating their expenditures among goods.
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Figure 19-2
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Of the graphs in Figure 19-2, which one shows the effects on the exchange rate of an expansion in Japan?
A. 1 B. 2 C. 3 D. 4
When an economy is operating with maximum efficiency, the production of more of commodity A will entail the production of less of commodity B because
a. resources are specialized and are not shiftable. b. resources are limited. c. the structure of demand is fixed at any point in time. d. material wants are insatiable.
The price that a person must pay in order acquire purchasing power now rather than in the future is called
a. the interest rate. b. the foreign exchange rate. c. the inflationary premium. d. the risk premium.
What is the relationship between real interest rates and investment, other things being equal?
a. No apparent relationship b. A quadratic relationship c. A positive relationship d. A negative relationship